wfn.org | ELCA Health Care Costs to Jump, Reflecting National Trend

[News News <NEWS@ELCA.ORG>]

ELCA NEWS SERVICE

August 29, 2000

ELCA HEALTH CARE COSTS TO JUMP, REFLECTING NATIONAL TREND
00-203-SS*

     MINNEAPOLIS (ELCA) -- At an Aug. 2-4 meeting here, trustees of the
Evangelical Lutheran Church in America (ELCA) Board of Pensions approved
an overall increase of 18.6 percent for 2001 in the revenue collected
from congregations and sponsoring employers for the health care benefits
plan. "This is the amount of increase we need in income to meet the
projected level of member health claims payouts," said David Adams, vice
president for research and design.
     To ease the overall increase, trustees voted to suspend the
survivor benefit plan contribution rate for 2001, citing sufficient
funds to cover expected survivor payments. With this suspension, the
average increase for all benefits, excluding pensions, will be about 9
percent.
     The 2001 rate plan approved by trustees is broken down into six
rate classes based on geographical differences in health care cost as
well as on the level of salaries paid. Each of the ELCA's 65 synods will
be assigned to one of the rate classes so that cost-sharing will be done
by congregations within a given synod rather than across the ELCA.  Some
rates will decrease, and some will increase.
     Some trustees raised concerns that, even though the increase will
be high for some congregations, other rate forecasts are much higher in
the health care industry. They worried that the amount wouldn't be high
enough to cover claims.
     Others agreed but expressed concern for congregations whose rates
would increase. "I think we're already beyond rate shock," said Lisa A.
Stump, Des Moines, Iowa. "I don't think we should go beyond the 16
percent average [the original figure proposed]. Already there'll be lots
of angry congregations."
     "The 16 percent is irrelevant. It's confusing," said board chair
Earl Mummert, Harrisburg, Pa.  He referred to the fact that each
congregation will pay a different percentage based on the rate class
it's in.
     Those who felt the 16 percent was insufficient wondered about a
mid-year adjustment. "Maybe it's better to take our medicine once and do
it now than to start at 16 percent and jump to 18 percent in mid-year,"
said Stump, reversing her earlier comment.
     The pension board said its goal is to break even while covering
the cost of benefits provided.   The ELCA plan differs from those in the
marketplace in four ways, Adams said:
     + The average member age is 10 years older than the national
average.
     + Rates are based on salary, not per member as in the industry.
This avoids age-related pricing.
     + Rates incorporate a sharing concept with some congregations
subsidizing more vulnerable ones.
     + The plan includes dental coverage.
     "It will be a challenge for us to communicate this increase," said
John G. Kapanke, ELCA Board of Pensions president. "We need to
communicate that this is still a good plan and congregations need to
stay in it for the good of all."

Retirement options
     Trustees also discussed a pension strategy to be implemented in
2003. The plan has several components:
     + consolidation of the regular and optional pension plans;
     + expanded investment options;
     + flexible distribution options;
     + comprehensive education and communication program.
     "We have competing values here," said the Rev. Lowell G. Almen,
ELCA secretary. "Plan members want options. But, we need to keep in mind
the church's overall desire to provide plan members an income in
retirement."
     "Plan members need to get some flexibility, but the plan also
needs some stability," said trustee Jon Christianson, Arden Hills, Minn.
     The trustees expressed concern over the possibility of offering
unlimited withdrawals from pension accounts and over how to provide
adequate education regarding any changes made to the plan at future
meetings. Trustees did vote to remove the requirement to annuitize by
age 70-1/2, retroactive to Aug. 1, 2000, pending ELCA Church Council
approval in November. They also approved the addition of two new
U.S.-only funds, with a socially screened counterpart, effective April
1, 2001, pending Church Council approval in November. The trustees will
consider other recommendations in November.

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[Specific information on 2001 contribution rates can be found on the Web
at www.elcabop.org.]

*Sonia C. Solomonson is managing editor for The Lutheran, the magazine
of the ELCA.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html